MPs reject amendment to remove cladding costs from leaseholders
It was returned to Parliament for consideration after the House of Lords refused to pass the bill without the amendments.
The motion, which was tabled by Lord Bishop of St Albans Alan Smith, included a clause that said leaseholders should not pay for cladding remediation unless they were also the owner or part owner of a high-rise building.
This was in response to the government announcing that a £3.5bn fund would be provided to correct cladding on buildings taller than 18 metres, while leaseholders of shorter buildings would pay with a government-backed loan capped at £50 a month.
During the debate Stephen McPartland, Conservative MP for Stevenage, said it was “morally unacceptable” to push the costs onto leaseholders.
He said: “Leaseholders do not want taxpayers to pay and members across the House do not want taxpayers to pay; we want those who are responsible to pay — the developers, the insurance companies and the building regulators who said that these properties were safe over the past 20 to 30 years, when many of the leaseholders who will be forced to pay these bills were in primary school or not even born.
“It is not acceptable, it is not fair and it is not right.”
Costs protecting leaseholders
In conclusion, Christopher Pincher (pictured), minister of state for housing, communities and local government, said the amendment was “unworkable and impractical”.
He added: “The amendment does not take into account remedial works that arise outside of the fire risk assessment process — for example, costs identified as a result of a safety incident or building works taking place.
“In such cases, this will not prevent costs being passed on, so it does not deliver what members want it to do.”
Pincher said if the amendment was added to the Bill and became law without a redrafting of legislation, the taxpayer would be liable for drawn out court proceedings. He said building owners could use litigation to claim for costs which could delay construction works.
Pincher said the changes would also require parliamentary counsel to avoid legal challenges, something which would not be resolved during the debate.
He added: “Furthermore, the amendments do not reflect the complexity involved in apportioning liability for remedial defects. The government [has] announced how they will distribute costs, including from developers and industry, through our upcoming levy and tax.
“A decision through this amendment to pass all these costs to the building owner would be overly simplistic and it could be counter-productive. It would be self-defeating if landlords, faced with remediation costs, simply walked away. Many could do that. They could activate an insolvency procedure and just walk away.”
He said it was not about protecting freeholders, but about protecting leaseholders from being left with costs if building owners refused to cover the payments.
“There is a real risk that this amendment could make the problem worse for leaseholders. We would be left in a situation where there would be delays to the commencement of the Fire Safety Bill, delays to our wider building safety programme, greater uncertainty for leaseholders and, quite possibly, unintended and deleterious consequences for them.
“We would not be any further forward in resolving the issue,” Pincher added.
New Homes Ombudsman will not have retrospective powers
It means buyers with existing faults in their brand new homes bought before the ombudsman starts will not benefit from the agency’s power to force developers to fix shoddy work.
The decision, relayed by housing minister Christopher Pincher, is another setback for buyers of new homes who face many hurdles to get refunds or faults fixed on their new build properties.
Despite announcing the compulsory ombudsman scheme a year ago with powers to ban rogue developers and order builders to carry out remedial work, the government still has not set a date for it.
Instead, the first version will be a voluntary one drawn together by the industry-led New Homes Quality Board. It had set a target to have the scheme in place by the start of this year.
Responding to a written answer from Labour MP for Gateshead Ian Mearns, Pincher said: “Provision for the New Homes Ombudsman will be brought forward through the Building Safety Bill which we will introduce when Parliamentary time allows.
“We continue to stay in touch with the industry-led New Homes Quality Board on its plans for a voluntary New Homes Ombudsman scheme, to be in place ahead of legislation.
“As there will be different requirements for developers when they are members of the New Homes Ombudsman, the legislation will not apply retrospectively.
“We will set out transition arrangements to the New Homes Ombudsman scheme when arrangements for the scheme are in place. Consumers will still be able to seek redress using existing routes, including through consumer codes and warranty providers,” he added.
Further Help to Buy extension gives builders time to complete – housing minister
The additional time was granted just days after Pincher said there would be no further extension.
Homes England has now given builders until 31 March to complete properties – the same day the scheme is due to expire before being replaced the next day.
However, Pincher added that the Ministry of Housing, Communities and Local Government (MHCLG) would “continue to monitor the situation closely”.
There has been significant concern about the Help to Buy deadlines for builders and buyers since the first Covid-19 lockdown almost a year ago which delayed work on many construction sites.
In July the government and Homes England provided developers an extra two months’ build time giving them until 28 February to build out properties, with the deadline for legal completion remaining at 31 March.
Where reservations were agreed before 30 June 2020, buyers have been given further flexibility allowing practical completion by 30 April and legal completion by 31 May.
However, Labour MPs Rebecca Long-Bailey and Rosie Cooper raised the issue in written questions, asking if the government was considering a further extension to ensure people could complete within the new deadlines.
Pincher replied: “Working in line with sector guidance, the construction industry has been allowed to continue during the subsequent Covid-19 restrictions.
“Reservations for the current scheme were closed on 15 December, providing builders sufficient time to complete their orders.
“Meanwhile, to mitigate against the risk of outstanding reservations not completing in time, Homes England announced on 15 January that it will not enforce the practical completion deadline of 28 February 2021 for the current scheme, thereby maximising the remaining time available time for developers to build out.
“These measures provide relief for developers to build out homes delayed by Covid-19. We nevertheless continue to monitor the situation closely.”
No Help to Buy extension for builders struggling to meet completion deadline
The previous version of the Help to Buy scheme closed to new applicants last month, with a revised version opening in its place the next day.
Builders have already been given one extension to the completion deadline for the previous scheme as a result of disruption by the coronavirus, with the deadline moving from 31 December 2020 to 28 February 2021.
However, Labour MP for Liverpool Wavertree Paula Barker asked if a further extension would be granted “to enable smaller developers to obtain materials and meet their obligations to buyers”.
Housing minister Christopher Pincher noted that the government recognised there had been disruption hence the two-month extension for building completions deadline with the legal completion deadline for the purchase remaining 31 March 2021.
“However, the government also announced some additional flexibility to protect existing reservations made before 30 June 2020,” he said.
“These sales, by agreement with Homes England, must reach practical completion by 30 April 2021 and legal completion no later than 31 May 2021.”
He added: “There are no plans to extend the current Help to Buy scheme beyond 31 March 2021 and a new two-year Help to Buy Equity Loan scheme for first time buyers commences on 1 April 2021.”
Waking watch fund not retrospective and limited to high rise blocks
This means leaseholders who are not responsible for the poor building quality and have already paid significant sums of money to help remedy the situation will not be able to claim the costs back.
The £30m fund was announced in December to help end the need for buildings with dangerous cladding to maintain waking watch wardens to look out for fires.
It will pay for the installation of fire alarm systems to replace these wardens which have proved highly expensive in many circumstances with leaseholders often stuck having to bear the costs.
In the fallout from the Grenfell Tower disaster three years ago, it was revealed that many buildings around the country were not fire safe and so would need to employ round-the-clock wardens to ensure residents could be warned of and evacuated in the event of a fire.
Housing minister Christopher Pincher confirmed the conditions of the fund in a series of answers to questions posed by Labour MP for Vauxhall Florence Eshalomi.
Pincher said the criteria for eligible claims would be high-rise buildings in the private and social sector of over 18 metres in height with unsafe cladding systems where there is a waking watch in place with costs being passed on to leaseholders.
“We will work with local authorities and fire and rescue services on the delivery of the fund and expect to publish a prospectus with further information on eligibility criteria and evidence requirements in January,” he said.
In another answer, Pincher added the fund will not cover retrospective costs where waking watch services are no longer in place because alarms had been installed prior to the 17 December fund announcement.
“The purpose of the fund is to incentivise the purchase of alarm systems in buildings where there is currently a waking watch in place and there is no common alarm system,” he said.
Minister contradicts PM by admitting EWS1 cladding forms can be used for low buildings
The admission comes after prime minister Boris Johnson attacked lenders during Prime Minister’s Questions last month for using the EWS1 forms on smaller buildings.
Lenders began using the forms for buildings less than 18m in height following a January update from the Ministry of Housing Communities and Local Government (MHCLG) which brought properties under 18m into scope.
Ministers have regularly protested this approach by lenders but now appear to accept that they are following necessary processes when doing so where cladding concerns arise.
Pincher’s statement came in response to a written question from Labour MP for Denton and Reddish Andrew Gwynne, who asked about lenders requesting EWS1 forms in blocks of three storeys or less.
In his answer, Pincher said: “The EWS1 process is not a government or regulatory requirement.”
He noted that whether an EWS1 is needed is determined by lenders and the professionals valuing a building.
“The department has come to an agreement with the Royal Institution of Chartered Surveyors (RICS) that flats in blocks without cladding do not need an EWS1 form,” he said.
“Buildings under 18m should not fall into the EWS1 process, unless in justifiable circumstances – usually relating to the proportion of cladding on the building.
“RICS is working with wider industry, including lenders, on new guidance for surveyors which will make clearer the circumstances when EWS1 valuation forms are, and are not, to be requested.”
In his outburst during Prime Minister’s Questions, Johnson said: “Mortgage companies should realise they [EWS1 forms] are not necessary for buildings under 18m and it’s absolutely vital they understand that while we get on with the work of removing cladding from all the buildings we can, and that’s what this government is continuing to do.”
Lenders responded with a statement on their own, saying: “In January, MHCLG’s advice note for owners of multi-storey, multi-occupied buildings was updated making it clear that all buildings should include an assessment of cladding as part of their Fire Risk Assessment.”
Cladding and building safety guidance ‘not designed for valuations’ – housing minister
Housing minister Christopher Pincher (pictured) said guidance issued by the Ministry of Housing, Communities and Local Government (MHCLG) in January on multi-storey building safety should not be used for valuations.
He made the comments in response to a written question from Labour MP for Poplar and Limehouse Apsana Begum asking what discussions had taken place with mortgage lenders on the valuation of properties with potential fire safety issues.
Pincher said: “The January 2020 Advice for Building Owners of Multi-storey, Multi-occupied Residential Buildings, was written for building owners to ensure the safety of their buildings. It was not designed to be used for valuation purposes.
“The EWS1 process was designed by the Royal Institution of Chartered Surveyors (RICS) to address lender concerns about cladding in high-rise residential buildings, but industry has applied it more widely than it was intended. Government does not support a blanket use of EWS1.
“The building safety minister has met with mortgage lenders seeking their support to a more proportionate approach to valuation of multi storey, multi-occupied residential buildings.”
However, the comments clash with those from leader of the House of Commons Jacob Rees-Mogg, who admitted people in buildings lower than 18m in height had often been excluded from government measures to tackle dangerous cladding.
Extended risk to all buildings
The January advice for building owners of multi-storey, multi-occupied residential buildings publication extends guidance previously issued on buildings over 18m tall to all residential buildings.
As a result, mortgage lenders have protested they must ensure that all buildings are safe for residents and for them to understand the risk they are lending on.
This has led to extended use of the Exterior Wall Survey (EWS1) form to assess the risk of external cladding on more buildings than originally intended and is causing significant hold-ups of months or even years due to a shortage of fire safety inspectors.
The guidance, which extended the work on building safety following the Grenfell Tower disaster in June 2017, said: “The risk of external fire spread should be considered as part of the fire risk assessment for all residential buildings, irrespective of height.
“The fire risk assessment should take in to account height, materials, vulnerability of residents, location of escape routes, and the complexity of the building.
“The explicit remediation advice provided in this advice note should be used to support the fire risk assessment and remedial actions may be required in buildings below 18m where there is a risk to the health and safety of residents, other building users, people in the proximity of the building, or firefighters.”
RICS has confirmed it is reviewing the EWS1 form guidance it issues.
And as Mortgage Solutions reported earlier this month, Pincher has confirmed discussions with lenders are taking place to find a “more proportionate approach” to valuing multi-storey properties.
Lenders need clarification from MHCLG
MHCLG has publicly criticised lenders regularly in written answers on the issue but has failed to back up claims or acknowledge any role in the situation.
On several occasions the housing minister has stated some lenders are not using EWS1 forms, but when questioned by Mortgage Solutions MHCLG refused to name those lenders.
The minister has also stated there have been meetings with lenders and other representative bodies on the issue regularly with separate ones involving the fire safety minister Lord Greenhalgh, but has failed to give details of those meetings.
In a joint statement given to Mortgage Solutions earlier this month, UK Finance and the Building Societies Association said: “Lenders are acutely aware of the impact that the safety issues related to cladding are causing for some homeowners and continue to collaborate with multiple market actors in pursuit of the best solution for customers.
“It’s essential that safety risks to homeowners are addressed while balancing the affordability of remediation measures that may become necessary in accordance with government guidance.
“However, it is only by assessing and fixing buildings which the government advice says are at risk that we can ultimately resolve fire safety concerns.
“Lenders are keen to see reduced demand for EWS assessments where appropriate to ensure attention is focused on higher-risk buildings. Key to this will be clarification of the government’s advice note to building owners, to support a more proportionate approach by valuers and lenders.”
No Help to Buy extension coming – housing minister
From 1 April a more restricted version of the Help to Buy scheme will come into place until March 2023, with regional limits on the value of properties and sales only to first-time buyers.
The government has already extended two key deadlines for builders by two months for the existing scheme in acknowledgement of the impact of the first Covid-19 lockdown.
And buyers who had a reservation in place before 30 June and have been significantly affected can request Homes England to assess their situation and look to provide an extension where necessary up to 31 May 2021 to legally complete.
Fears have also been raised that completions will be held up by the high demand in the mortgage market coupled with the stamp duty holiday which ends on the same day, and Homes England has already had to apologise after it stepped in to clear delays from one backlog.
But despite pressure from the industry to extend the overall cut-off point for sales to be completed, the Ministry of Housing, Communities and Local Government appears unmoved.
No plans to extend
Responding to a written question, Pincher agreed there had been disruption but said changes had already been made to accommodate this and no further deadlines would be moved.
“The government recognises that there have been delays caused by Covid-19. That is why on 31 July a two-month extension was announced to the building completion deadline from 31 December 2020 to 28 February 2021,” he said.
“The legal completion deadline for the purchase remains 31 March 2021.
“The government also announced an extra measure to protect existing customers who have experienced severe delays as a result of coronavirus.”
Pincher continued: “We believe these measures provide sufficient time for developers to build out homes delayed by Covid-19 and protect customers whose purchases have been significantly delayed. There are no plans to extend the current scheme further.”
No plan to extend stamp duty holiday – housing minister
With the housing market running red hot at present and many firms operating at reduced capacity due to coronavirus restrictions the time to complete purchases has lengthened significantly, putting many buyers at risk of missing the tax break.
As a result, representatives from across the industry have called for a temporary extension or tapering of the deadline to the stamp duty holiday.
Last week Conveyancing Association director of delivery Beth Rudolf revealed in Mortgage Solutions the trade body had been lobbying government to stagger the deadline and admitted some firms were turning down work to maintain service levels.
However, it appears the government is unlikely to consider such a move.
Pincher confirmed the policy would not change when responding to a written question from Labour MP for Hove and shadow justice minister Peter Kyle, who asked if the cut would be extended past the 31 March deadline.
Pincher (pictured) said: “The temporary increase in the Stamp Duty Land Tax nil rate band was designed to provide an immediate stimulus to the property market, where property transactions fell during the Covid-19 lockdown.
“The government does not plan to extend this relief and will continue to monitor the property market.”
Minister refuses to rule out compulsory building purchases to fix flammable cladding
Housing minister Christopher Pincher (pictured) confirmed the government was open to all options, potentially including compulsory purchases, to solve the issue.
While government funds have been made available for public and privately-owned buildings to help with the removal of dangerous cladding, many property owners are refusing to engage in the process.
This can be particularly difficult to enforce where the building is owned through an offshore company.
Failing to deal with the cladding leaves residents vulnerable to the risk of fire disasters such as that at Grenfell, and also often means leaseholders are unable to sell their properties, leaving them stuck in their homes.
Pincher was responding to a written question from Conservative MP for Hendon Matthew Offord, who asked for an assessment “of the potential merits of using compulsory purchase orders on freeholders who refuse to engage in the removal of combustible cladding”.
Pincher replied: “The government’s focus has been to ensure that remediation of unsafe cladding happens as quickly as possible.
“We engage with local enforcement authorities, including local authorities and fire and rescue services, on the routes they assess would be most effective to ensure resident safety and support them to take action where remediation is yet to start on site.
“While we would not rule out any option, to date we have focussed on funding, provision of construction support and enforcement powers to increase the pace of remediation.”
Yesterday Mortgage Solutions reported that the Royal Institution of Chartered Surveyors (RICS) is reviewing the External Wall Survey (EWS1) process it developed with lenders to assess whether buildings remain a fire safety risk.